Auditors found no sign of misappropriation
Okanogan County needs to make sure that the same person doesn’t collect and deposit money at the fairgrounds. The county also must adopt clearer written policies to track small, valuable assets and county contracts.
Those admonitions came in a management letter from an auditor for Washington state in their annual audit of the county for 2018. Auditors use management letters to convey the middle level of concern. The letter was provided to the county commissioners at the auditor’s exit interview on Sept. 16.
The auditor didn’t find any sign that funds had been misappropriated or gone missing, Jake Santistevan, audit manager for the Wenatchee branch of the Washington State Auditor, said. But the county needs to sharpen its oversight to be sure that money is not collected, deposited and reconciled by just one individual at facilities like the fairgrounds or landfill.
The auditors dinged the county for not having adequate “segregation of duties” at the fairgrounds. Revenues collected at the gate during the fair and for facility rentals and camping weren’t adequately tracked or documented, they said.
Some funds weren’t deposited the same day they were received by the fair. There weren’t receipts for all money collected, although in one instance $70 was deposited without a corresponding receipt.
The only money that couldn’t be accounted for was $95 from cash set aside to make change at an entry gate, although there was no way to assign responsibility for the missing funds because of the record-keeping inadequacies, the auditors said.
The auditors didn’t find proper records to track $4,000 for a livestock sale — the check was made out to another organization but given to the county to pass on. A fairgrounds employee recalled the situation and had instructed a co-worker not to fill out a receipt for the money, but it was logged in the receipt book anyway, Santistevan said. The money was not deposited in a county fund and there is no reason to believe the other group didn’t get the money, he said.
The auditors identified similar deficiencies at the fairgrounds in their audit last year.
There were similar concerns at the county landfill. “They need a better internal-control system so that somebody else would do a final check,” Santistevan said.
“It’s always a challenge with fairgrounds and small departments,” Santistevan said. Because there’s generally just one person handling all aspects of the process, auditors are concerned that could create opportunities for mistakes or misappropriation.
The county commissioners had an extensive conversation with the auditors at the exit interview. They’re looking at ways of having another employee double-check receipts at the fairgrounds and landfill to be sure they match, Okanogan County Auditor Cari Hall said.
The auditors found that the county didn’t keep careful inventories of “small and attractive assets,” items like computer laptops and hand tools that are “theft-sensitive,” Santistevan said.
The county requires all departments to maintain an inventory of anything valued from $200 (with a serial number) to $5,000, Hall said. Each department should clearly track and tag these items, including new purchases, disposals, and transfers to another department.
But most departments didn’t keep up-to-date records, and 39 of 40 departments didn’t provide the required inventory to the clerk of the board last year, the auditors found.
In other matters, the auditors found that the county hadn’t developed written procedures to ensure that the Public Works Department advertises for competitive bids for projects that exceed a threshold in federal funding. Federal regulations changed five years ago, and this was the first year a written policy was required, Santistevan said.
The county has already started drafting appropriate procedures, which will apply to all county projects, not just road projects, he said.
Another matter flagged by the auditors had to do with how the county reports money the treasurer invests for junior taxing districts such as school and EMS districts. The county typically invests these funds for 30 days and then reinvests them when they mature.
The auditors want the county to change the way these investments are reported, so that the financial statements show a beginning and ending balance for the year, Hall said.
The state auditors said that because the county had been reporting the reinvestment of funds every month, it “overstated” additions and distributions by $600 million.
The county has also taken steps to create a separate fund to track building permits and related expenses. State law requires that the revenue and expenditures for departments funded by fees be tracked in a separate account, Hall said.